2025 Risk Bulletin:
Merchant Risk

Kava (Piper methysticum) is a plant root traditionally used for its calming effects. It is commonly sold as a supplement and a beverage (e.g., tea).  In the early 2000’s, a German study found that kava was associated with rare cases of severe liver injury. In response, many countries restricted kava’s use or banned it outright. However, the results of the German study were ultimately contested and regulations regarding kava were relaxed in some jurisdictions. For details, see New York Times, New Questions About Kava’s Safety (Jan. 16, 2002); see also Planta Medica, German Kava Ban Lifted by Court (Dec. 2015).    However, kava remains restricted for sale in several countries, including:  Australia: Kava is a Schedule 4 prescription-only medicine except at specified lower dosages.  Netherlands: Kava is prohibited in herbal preparations.  Singapore: Kava is prohibited in health supplements.   United Kingdom: Kava is prohibited in both medicines and food.   United States: Kava is commonly sold as a dietary supplement. However, it is restricted for sale as a conventional food. See FDA, Warning Letter to Herbal Junction (March 11, 2016) (“Kava kava [is] not approved for use in any conventional food. Therefore, your liquid concentrates, coolers, herbal infusions and bars which contain kava kava […] are adulterated within the meaning of [the Food, Drug, and Cosmetic Act].”).   G2RS has always reported kava as “pVIO-Illegal drugs,” under the sub-category, “May contain illegal.” However, starting next month, we will report kava as “pVIO-Illegal drugs” under its own sub-category, “Kava.” This will allow us to re-report all kava merchants, as well as bring greater visibility to this risk area.   For additional information about kava, please reach out to your Customer Success representative and ask for a copy of G2RS’ guide titled Kava: Regulatory Overview. 

Kratom (Mitragyna speciosa) is a plant with opioid-like properties, often marketed as a natural remedy. Kratom is commonly sold in powder, capsule, and extract forms.   According to the US Drug Enforcement Administration (DEA), consumption of kratom’s leaves produces both stimulant effects (in low doses) and sedative effects (in high doses)—and can lead to psychological and physiological dependence.  In some countries, kratom (the plant) is a controlled substance (e.g., Denmark, France, and Israel) and is subject to significant restrictions on sale.    G2RS currently reports kratom as a “VIO–Illegal drugs,” under the subcategory “Kratom.” Risk teams should flag merchants selling kratom and verify that they are not offering delivery to restricted jurisdictions.   For additional information about kratom, please reach out to your Customer Success representative and ask for a copy of G2RS’ guide titled Kratom: Regulatory Overview. 

G2RS has recently seen assessments involving the sale of “cold weapons” to the United Kingdom. A “cold weapon” is a weapon that does not use gunpowder, explosives, or other incendiary materials. The UK has strict weapon laws, and many items that might be legal to sell elsewhere are outright banned from import or possession in that country.   The list of banned weapons is extensive and includes:  Zombie knives (defined as knives over eight inches in length that often have a serrated edge, spikes, or more than 2 sharp points)   Butterfly knives (also known as “balisongs”)  Knuckledusters (also known as “brass knuckles”)  Shurikens (also known as “death stars” or “throwing stars”)  For additional examples, see here.   If a merchant in your portfolio sells knives, swords, self-defense tools, or similar items, confirm that they have robust controls to block orders bound for the UK—or any country with equivalent bans. A single prohibited knife sale to a UK address could trigger significant card brand assessments. 

Certain US states explicitly prohibit shipping tobacco products directly to consumers. For example, in Arizona, it is illegal to “[c]ause a tobacco product to be ordered or purchased by anyone other than a licensed person or a retailer who orders or purchases from a licensed person.” Likewise, in Washington, it is illegal to “[s]hip or transport, or cause to be shipped or transported, any tobacco product ordered or purchased by mail or through the internet to anyone in this state other than a licensed wholesaler or retailer.” This means a merchant selling tobacco products online may be violating state law if they fulfill orders to those states.   Other states, such as Pennsylvania, require licensure to ship tobacco products to consumers. See, e.g., 72 Pa. Stat. Ann. § 8220-A. Payment providers should ensure their merchants understand which states prohibit or restrict online consumer sales and have systems in place to block sales where appropriate.